Viskase Corporation v W.R. Grace & Co.-Conn

[1998] APO 47

official notice

decision of a delegate of the commissioner of patents

Application  :          No. 634991 in the name of VISKASE CORPORATION

Title:          Heat Shrinkable Very Low Density Polyethylene Terpolymer Film

Action: Award of costs in relation to a withdrawn opposition under section 59 of the Patents Act 1952 by W.R .GRACE & CO.-CONN.

Decision:          Issued            .

Abstract

Variation to the scale of costs sought where the opposition had been withdrawn shortly before the hearing date. Circumstances not found to warrant such an award - Sterling Drug Inc v Boots Company PLC, 35 IPR 630, Colgate-Palmolive Co and another v Cussons Pty Ltd, 28 IPR 561 and Re Wilcox; Ex parte Venture Industries Pty Ltd and Others 141 ALR 727 applied.

Costs as specified in Schedule 8 of the Regulations awarded against the opponent.

patents act 1990

decision of a delegate of the commissioner of patents

Re:Patent Application No. 634991 by Viskase Corporation and the award of costs in relation to a withdrawn opposition under section 59 of the Patents Act 1952 by W.R. Grace & Co.-Conn.

background

Patent application no. 634991 by Viskase Corporation (Viskase) was advertised accepted on 11 March 1993. W.R. Grace & Co.-Conn. (Grace) filed a notice of opposition on 11 June 1993 and the evidentiary stages were completed in February 1996. The opposition was set down for hearing on 11 February 1997 but on 7 February Grace's attorney advised that its opposition was withdrawn.

Subsequently Viskase sought costs including a variation of the Scale of Costs and filed submissions and a declaration in support by Richard Baddeley on 28 February 1997. Grace in turn filed submissions and a statutory declaration made by Michael Angliss. The matter was set down for hearing on 7 August 1998 in Melbourne. Viskase was represented by Mr Richard Baddeley, patent attorney, of Watermark, Perth and Grace by Mr Michael Angliss, patent attorney, of Davies Collison Cave, Melbourne.

At the hearing Mr Angliss indicated that Grace did not dispute an award of costs but only the variation of the scale and hence the substance of the hearing related to that issue.

decision

The power of the Commissioner to award costs is based on section 210 and regulation 22.8.  The power to award costs is discretionary, so I must take into account all relevant considerations (see American National Can Co. v W.R. Grace & Co.-Conn (1994) AIPC 91-063, 29 IPR 292). In cases where an opposition is withdrawn and the opposition has not forced the applicant to amend or withdraw its application, the opponent is normally considered to have lost and costs are awarded against it. See for example Hydro-Plan Engineering Ltd v James Hardy Irrigation Pty Ltd 28 IPR 669, (1994) AIPC 91-060. This is the situation in the present dispute however Viskase has asked for costs on an indemnity basis rather than on a party and party basis in line with Schedule 8 of the Regulations.

Regulation 22.8 states as follows:

"(1) The Commissioner must not award costs in proceedings to which this Division applies, other than costs specified in Schedule 8 unless each party to the proceedings has had the reasonable opportunity to make a submission on the matter of the award of those costs.

(2) The Commissioner may award an amount:

(a) for costs in respect of a matter specified in column 2 of an item of Part 1 in Schedule 8; or
(b) in respect of the expenses or allowances of a person in relation to proceedings to which this Division applies."

The Commissioner's discretion in this regard has been discussed in a number of Office decisions including for example Sterling Drug Inc v Boots Company PLC, 35 IPR 630 and John Lewis Swanson and anor v K J Mellet Nominees (unreported Patent Office decision on application 637709, 4 August 1997).  It is clear from these and the principles stated by  Sheppard, J in Colgate-Palmolive Co and another v Cussons Pty Ltd, 28 IPR 561, that the Commissioner should not normally depart from an award of costs on a party and party basis unless the circumstances clearly warrant doing so. According to Cooper and Merkel JJ in Re Wilcox; Ex parte Venture Industries Pty Ltd and Others, 141 ALR 727, such circumstances arise "when the justice of the case so requires or where there may be some special or unusual feature in the case"

While not wishing to do injustice to Mr Baddeley's substantial submissions, Viskase's claim for indemnity costs essentially comes down to a) the unusually complex nature of the proceedings and b) the prejudicial behaviour of Grace.

In relation to point a) I have been directed to the evidence filed in the opposition and the effort required by the expert witness Solomon. With due respect, while the evidence appears complex I do not agree that the volume of evidence is remarkable or that the technology or the legal issues involved are unusually complex when considered in light of other proceedings that come before the Commissioner. There also does not appear to have been any "unusual expense" per Sterling Drug v Boots, supra  or any other "special or unusual feature".

In relation to point b) the argument is that Grace has continued the opposition to within a few days of the scheduled hearing when, according to Viskase, they should have sought settlement much earlier. Viskase points in particular to the dismissal of the corresponding opposition before the European Patent Office in 1995 and also the delay between the completion of evidence and the date of withdrawal. Mr Angliss pointed out that the outcome in the EPO was appealed but in any event I do not see how the EPO decision particularly supports Viskase's argument since while it may be some indicator of likely success it does not preclude the opposition in Australia being upheld either on some or all grounds. In this regard it is important to note that no one has suggested that Grace did not mount a serious opposition to the patent application. Indeed Mr Baddeley indicates that a great deal of effort was required to respond to the evidence in support. Furthermore Grace, by filing its evidence in reply well after the EPO decision, showed it was actively pursuing the opposition regardless.

Nevertheless it appears from Mr Angliss's evidence that Grace was prepared to settle the Australian opposition on the basis of a settlement in New Zealand. Exhibit MLA-4 includes a copy of a letter dated 6 October 1996 offering to settle in New Zealand on the basis of an amendment to the application and each party bearing its own costs. Subsequently in a letter dated 16 January 1997 a further offer was made to settle on each party bearing its own costs and this appears to have been accepted by a letter dated 13 March 1997.

However Grace does not appear to have informed Viskase about its intentions in Australia and Viskase rightly prepared on the basis that the hearing would go ahead on 11 February 1997. Grace for its part, perhaps in light of the negotiations going on in New Zealand, withdrew its opposition unconditionally on 7 February. The timing was unfortunate for Viskase who had already briefed counsel but I do not think the evidence points to Grace acting only with the motive to cause Viskase expense and inconvenience and there is certainly nothing to suggest an "abuse of process" as faced by the court in Re Wilcox, supra.  Grace could even be said to have saved Viskase the cost of attending the hearing.

Grace has effectively lost the opposition and the Act and Regulations allow Viskase limited compensation through an award of costs. The scale of costs may be considered by some to be inadequate even on a party and party basis but the scale is set by Regulation and, as indicated by the authorities mentioned above, the Commissioner should not generally move from it unless the circumstances warrant. Viskase has not shown that the present circumstances justify an award of costs on any other basis and consequently I award costs in the opposition against Grace in accordance with Schedule 8.

I award costs in relation to the hearing on 7 August 1998 against Viskase.

PHILIP SPANN
Delegate of the Commissioner of Patents

Patent attorneys for Viskase Corporation: Watermark, Perth

Patent attorneys for W.R. Grace & Co.-Conn.: Davies Collison Cave, Melbourne